How to measure social media ROI

Is your social media working? If you can’t help but wonder, Is it worth it? There’s a way to find out! Return on investment (ROI) is the amount you’re benefiting from an endeavor. It compares your net revenue to your costs. But, measuring your social media ROI can feel complicated. There are so many metrics. Where do you start? Let’s take a deeper look.

The first step, as always, is to define clear objectives.

Ask, What are your business goals? Then figure out how your social media objectives can align with those business goals. Here are some examples of business goals:

• Drive conversions (lead generation, newsletter signups, sales, etc.)

• Grow brand awareness

• Grow a loyal customer base

• Improve brand sentiment

• Mitigate brand crises

• Enhance customer service 

• Improve employee morale

• Create partnerships

Your next step is to track the right metrics/KPIs (key performance indicators).

You want to measure those KPIs that relate to your business goals, as listed above. Here are some popular KPIs:

• Reach

• Engagement (comments, likes, shares)

• Follower growth

• Referral traffic

• Leads generated

• Form submissions

• Sentiment

• Newsletter signups

• Conversions

• Sales/revenue generated

• Website traffic

• Views

• Time on site

• Click-through-rates (CTR)
  

Now is the critical thinking part: Ask questions! 

This will help you make sure the metrics you’re looking at directly align with your business goals.

What actions will a potential customer take after seeing our social media content?

Does this metric reflect my business objectives?

Does this metric help me make decisions (what to do more or less of)?

Can I measure it accurately and consistently?

Finally it’s time for some math.

First, we need to calculate the quantitative value generated from social media.

To do so,

• Use analytics tools like Google Analytics for tracking website traffic and conversions from social media

• Use native platform analytics for specific social media sites

• Use third-party tools like Hootsuite, Sprout Social, and Buffer

Your task is to determine what all this data is worth. If any value is qualitative versus quantitative, keep it on hand and we’ll save that for the final step in the process.

Next, calculate your social media costs. These include:

• Social media management tools and subscriptions 

• Ad spend

• Content creation costs (licensing, graphic design, video production)

• Labor costs (salaries, freelancer fees)

Then, you can calculate your ROI.

Social media ROI = ((Value generated from social media - Costs of social media investment) / Costs) x 100

Examples:

Revenue = $5K

Costs = $1K

((5,000 - 1,000) / 1,000) x 100 = 400% ROI

Follower growth = 200

Value per follower = $50

Costs = $1K

(([200 x 50] - 1,000) / 1,000) x 100 = 900% ROI

The last step is to create an ROI report so you can compare your ROI over time.

Your ROI report will show the impact of social media as it relates to your business goals. Here are some important things to consider when composing your ROI report:

• Use a report template

• Tie social results back to business goals

• Compare the data against your objectives and KPIs

• Identify what is working and what isn’t

• Use insights to adjust your strategy for better results

• Combine qualitative and quantitative for a more comprehensive analysis

Ready to boost your social media ROI? Get some help from Media À La Carte. Schedule a discovery call to learn more.